Low price energy future?

While Prime Minister Tony Abbott says renewable energy significantly increase electricity bills, a new study finds wind energy actually forced down wholesale power prices by more than $3.2 billion over six years - but that little of the savings flowed through to consumers.

Mr Abbott on Tuesday said the renewable energy target, which has largely driven investment in wind farms, was ''very significantly driving up power prices''.

Wind farms forced down wholesale prices but consumers may not have won. Photo: Bloomberg

''It's precisely the opposite,'' John Foster, one of the authors of the study that has been submitted to a review of the target, said. "The [target] – and the stimulation of wind – has increased supply and flattened out the expensive peaks."

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For instance, modelling of 30 minutes of heavy demand for electricity in Victoria on January 31, 2011 showed the wholesale price of $1.4 million would have ballooned to $45.6 million had only coal and gas-fired power plants had been able to respond.

Mr Abbott's statement has been interpreted as signalling his government may weaken or scrap the target requiring at least 20 per cent of power from renewable sources once a review into the scheme is complete.

Share of wind exceeds 100% demand Photo: AEMO

Lynette Molyneaux, a researcher at the university's Energy Economics and Management Group, said competition has increased ''phenomenally'' with the introduction of wind farms and the rapid spread of rooftop solar photovoltaic panels.

Large fossil-fuel generators in the past ''got away with some fantastic events, particularly when demand peaked on a summer's day'', Ms Molyneaux said.

Once other costs including the purchase of renewable energy certificates were taken out, the target delivered a net benefit of $870 million from 2007 to 2012, the study found.

Little of that benefit reached consumers, though, with a lack of transparency masking just how much retailers snagged of the gains, Ms Molyneaux said. "We don't see evidence of consumer prices going down."

Debate over the target is expected to intensify with coal baron Clive Palmer saying last week his party will use its balance of power in the new Senate to preserve the existing target – now set at 41,000 gigawatt-hours of renewable energy by 2020 – until at least 2016, whatever the recommendations of the government's hand-picked review panel.

Environment Minister Greg Hunt, meanwhile, on Wednesday dubbed a plea by 25 Coalition backbenchers for exemptions from the target for aluminium producers as a ''very constructive solution''.

"We are all working towards a common ground of making sure that we are protecting jobs and investment on the one hand, reducing emissions on the other, and finally doing our best to take the pressure off electricity prices," Mr Hunt said.

The aluminium industry already receives exemptions from the target of about 90 per cent.

Among the states, Victoria was the biggest beneficiary, snaring $2.37 billion of the $3.2 billion in wholesale savings. It hosts the second-largest wind turbine capacity of the states and can tap the largest – in South Australia – because of good transmission connections, the researchers said.

NSW lagged with only $136 million in wholesale savings because of its modest wind farm presence, while wind farm-free Queensland had barely any savings at all.

By 2012, wind farms were also responsible for reducing carbon emissions at the rate of 4 million tonnes a year, the study said.

Separately, the latest Cedex report by energy consultants Pitt & Sherry found carbon emissions from the National Electricity Market fell 10.4 per cent, or 18 million tonnes, in the two years of the carbon tax.

A fall in electricity demand contributed part of the drop, as did a switch to more wind and hydro electricity. Coal supplied 73 per cent of the power to the National Electricity Market – which serves eastern Australia – a year to the end of June, almost certainly a record low, according to Hugh Saddler, principal consultant with Pitt & Sherry. Gas supplied 12.7 per cent, hydro 9.6 per cent and wind 4.7 per cent.

Windy conditions over the past week saw wind farms supply 14.5 per cent of the generation in NSW, South Australia, Tasmania and Victoria from Monday to Saturday.

At 4.25am on Friday, South Australia's wind generation exceeded demand in the state for the first time, according to Infigen Energy, a wind farm operator.

''The greatest significance of these figures is probably the demonstration that the [market] is sufficiently robust to be able to accommodate such large shares of wind generation, with no effect on the supply of electricity to consumers,'' the report said.

79 comments

Every day we have further illustrations of the harm that Abbott is causing this country and economy. If we are already getting significant savings from renewable energy providers, then how much more as the technology develops and economies of scale cut in?

It appears that the Party of lowest ever interest rates and better economic management doesn't have a clue about economic management.

Commenter

Ross

Location

MALLABULA

Date and time

July 03, 2014, 7:52AM

"It's precisely the opposite". No surprises there, I always interpret Abbott's words as the opposite of their generally accepted meaning. 'No new taxes' means 'new taxes', 'no cuts to the ABC' means 'cuts to the ABC', etc.Remember Ross how Tony could not even interpret an electricity bill.

Commenter

bg2

Date and time

July 03, 2014, 8:41AM

+1SIr Tony of One Term's Byzantine energy "policy" = thought bubble to achieve ideological agenda. Add to today's extraordinary appointment of Brown, callling for full privatisation of the ABC, and Allbrechtson, calling the ABC a "Soviet style workers collective" only expect to see erosion of alll things evidence based and merit driven. Like kids in a lolly shop. Appalling

Commenter

rod steiger

Location

toukley

Date and time

July 03, 2014, 8:49AM

Everyday we have some garbage sprouted by some green group that is gobbled up by the left desperate to prove they are right. This model looks at a 30 minute time frame when the wind is blowing. What about the other 1410 minutes in the day?

This is a common trick with warmers. They changed the name from AGW to climate change because the world stopped warming. Deceiptful deceptive money grabbing liars.

Commenter

Selective study

Date and time

July 03, 2014, 9:06AM

Selective study - agreed. The claim about the $1.4m versus $45.6m for fossil fuel power is extraordinary, but hasn't been calculated or sourced.

It's a great news story if it's true, but something tells me there was more to the "modelling" than meets the eye.

Commenter

Hacka

Location

Canberra

Date and time

July 03, 2014, 9:15AM

selective study - what an apt moniker!! Climate is changeing, the world is getting warmer, and the Luddites are always with us. NASA _ GISS project, whose data often quoted by denialists/ingnorants, in January 2014: "NASA scientists say 2013 tied with 2009 and 2006 for the seventh warmest year since 1880, continuing a long-term trend of rising global temperatures.

With the exception of 1998, the 10 warmest years in the 134-year record all have occurred since 2000, with 2010 and 2005 ranking as the warmest years on record.

NASA's Goddard Institute for Space Studies (GISS) in New York, which analyzes global surface temperatures on an ongoing basis, released an updated report Tuesday on temperatures around the globe in 2013. The comparison shows how Earth continues to experience temperatures warmer than those measured several decades ago.

The average temperature in 2013 was 58.3 degrees Fahrenheit (14.6 degrees Celsius), which is 1.1 °F (0.6 °C) warmer than the mid-20th century baseline. The average global temperature has risen about 1.4 °F (0.8 °C) since 1880, according to the new analysis. Exact rankings for individual years are sensitive to data inputs and analysis methods.

I'd like to know what the energy intensive businesses such as smelters are doing to solve their own problems rather than looking for government handouts. Are their rooves covered with solar panels? A few wind generators dotted around the fence line? The only justifiable government assistance would be in the form of financial incentives for energy intensive industries to invest in renewable power generation. Once the capital cost is covered, renewable power is cheap.

Commenter

jessie

Date and time

July 03, 2014, 9:29AM

The problem is that Abbott & co aren't interested in facts. All they're interested in is the profits of the fossil fuel power generating companies and the coal mining companies that supply them.

Phoney Tony and the Round Earth Sceptics should be booed off the stage.

Commenter

Greg Platt

Location

Brunswick

Date and time

July 03, 2014, 9:41AM

It's great to see Selective Study and Hacka sticking up for Abbott here. Abbott is of course a self proclaimed conservationist (of course we know from his track record he would never mislead us!) We can't have any clean energy, that will only upset Joe when he drives past Lake George on the way to and from Canberra and sees the wind turbines. Much better to dig up the Hunter Valley and displace all the agricultural land there, and chuck up more pollution into the atmosphere. Of course the notion that around 97% of the world's scientists might disagree with Abbott, Hacka and Selective counts for nought.

Commenter

DaveB

Date and time

July 03, 2014, 9:42AM

Very true Ross. Evidence is anathema to Abbott and Co whenever, and as it frequently does, contradict their ideological, evidence phobic agenda.

Of course the LNP cheer squad also disparage evidence, especially of the independent type that contradicts their fantasist world views. According to them, and in reality this government, many thousands of scientists are engaged in a worldwide conspiracy and are manufacturing evidence of global warming/ ACG. Evidence for this? Scientific illiterates misunderstanding, or even deliberately misrepresenting, scientific data. Some are paid and or otherwise supported by the fossil fuel industry via sham groups who also advocated against tobacco being carcinogenic, and who were not so coincidently supported by the tobacco industry. They don't even have the decency to put up alternate theories that can survive even basic scrutiny. If there's a conspiracy, it's not by the very many providing peer reviewed science in support of climate change, it's by the vested interest minority, being the 'denier' camp that provide nothing but white noise to confuse the intellectually lazy.